dave flitman, ceo | peter jackson, cfo
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Safe Harbor & Non-GAAP Financial Measures
Cautionary Notice
• Statements in this presentation and the schedules hereto that are not purely historical facts or that necessarily depend upon future events, including statements
about expected market share gains, forecasted financial performance or other statements about anticipations, beliefs, expectations, hopes, intentions or strategies
for the future, may be forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended. In addition, oral
statements made by our directors, officers and employees to the investor and analyst communities, media representatives and others, depending upon their
nature, may also constitute forward-looking statements. All forward-looking statements are based upon currently available information and the Company’s current
assumptions, expectations and projections about future events. Readers are cautioned not to place undue reliance on forward-looking statements. Forward-
looking statements are by nature inherently uncertain, and actual results or events may differ materially from the results or events described in the forward-looking
statements as a result of many factors. Builders FirstSource, Inc. undertakes no obligation to publicly update or revise any forward-looking statements, whether as
a result of new information, future events or otherwise. Any forward-looking statements involve risks and uncertainties, many of which are beyond the Company’s
control or may be currently unknown to the Company, that could cause actual events or results to differ materially from the events or results described in the
forward-looking statements, including risks or uncertainties related to the continuing COVID-19 pandemic, the Company’s merger with BMC and other acquisitions,
the Company’s growth strategies, including gaining market share, or the Company’s revenues and operating results being highly dependent on, among other
things, the homebuilding industry, lumber prices and the economy. Builders FirstSource, Inc. may not succeed in addressing these and other risks. Further
information regarding factors that could affect our financial and other results can be found in the risk factors section of Builders FirstSource, Inc.’s most recent
annual report on Form 10-K filed with the Securities and Exchange Commission (“SEC”) and may also be described from time to time in the other reports the
Company files with the SEC. Consequently, all forward-looking statements in this release are qualified by the factors, risks and uncertainties contained therein.
Use of Non-GAAP Financial Measures
• This presentation includes financial measures and terms not calculated in accordance with accounting principles generally accepted in the United States (“GAAP”)
in order to provide investors with an alternative method for assessing our operating results in a manner that enables investors to more thoroughly evaluate our
current performance as compared to past performance. We believe these non-GAAP measures provide investors with a better baseline for modeling our future
earnings expectations. Our management uses these non-GAAP measures for the same purpose. We believe that our investors should have access to the same set
of tools that we use in analyzing our results. These non-GAAP measures should be considered in addition to results prepared in accordance with GAAP, but should
not be considered a substitute for or superior to GAAP results. Our calculations of adjusted net income, adjusted net income per share, adjusted EBITDA, free cash
flow and net leverage are not necessarily comparable to similarly titled measures reported by other companies. The company provided detailed explanations and
reconciliations of these non-GAAP financial measures in the earnings release included in its Form 8-K filed with the Securities and Exchange Commission on
August 5, 2021.
2 | © 2021 Builders FirstSource. All Rights Reserved.
1.0
2.0
3.0
4.0
5.0
6.0
7.0
8.0
9.0
10.0
0
200
400
600
800
1,000
1,200
1,400
1,600
1,800
2,000 Single-Family Housing Starts (000’s)
Benefitting From Favorable Industry Trends%
Annual Average Rate on 30-year Fixed-Rate Mortgages
3 | © 2021 Builders FirstSource. All Rights Reserved
0
100
200
300
400
500
600
700
800
900
1,000 Single-Family Homes Under Construction (000’s)
Market Trends Support Further Upside
Source: U.S. census and Freddie Mac
Mortgage rates
remain near
January 2021
record low
Single-family
housing starts and
homes under
construction
continue on robust
upward trend
Highlights of Record Q2 2021 Results
Net sales
Gross Profit
Adjusted
EBITDA
$5.6b+90.6% YoY
(+35.3% Core Organic1)
$1.6b
+105.4% YoY
$835.8m
+231.6%
15.0% Margin
1Core Organic compares Q2 2021 to combined non-GAAP pro forma first quarter 2020, and excludes other acquisitions, commodity price fluctuations and differences in selling days between periods.
Record Sales Performance
• Focused execution, accelerating demand, and increasing prices drove record results
• Improving housing starts, low mortgage rates and strong demand for single family living remain tailwinds for our products and services.
Operational Performance Drove Record Adjusted EBITDA and Adjusted EBITDA Margin
• Established partnerships with customers, ability to deliver value, and an emphasis on cost management produced higher profitability
• Disciplined pricing process continued to support margins during volatile market conditions
• BMC integration efforts and cost synergies ahead of schedule; delivered $36 million through Q2 and estimating $80 to $100 million in 2021
Value-Added Focus Creating Long-Term Value
• Strength and scale of value-added offerings led by 58% growth in manufactured products
• Strategic acquisitions with heavy value-added product mix contributed 3.5% to net sales, supporting value-added products growth
4 | © 2021 Builders FirstSource. All Rights Reserved.
Expect to Deliver 10%+ Adjusted EBITDA Margin
on 2021E Base Business1
2021E Base Business Product
Sales Mix at $400/mbf
Over 60% of BFS’s Base Business1 is Non-Commodity…
…The Majority of our EBITDA Growth is Driven by Value-Added Products and Sustainable Operations Improvement / Synergy
22%
23%
34%
21%Value-Added Product Mix:
43%
Windows, Doors & Millwork
Manufactured Product2
Lumber & Lumber Sheet Goods
Specialized Products and Other
1. This estimate assumes $400/mbf lumber & sheet good pricing2. Commodity exposure in manufactured products represents
an estimated 4% of 2021E net sales mix at $400/mbf
Commodity Exposed2:
38%
$11.5 $12.5 $15.3
$3.2
($0.6)
$10.9 $0.3$12.8
$18.5
15.4%
$0.9 $1.1 $1.6
20202019
$0.0
2021E
$0.8$1.1
$2.3
Sales ($Bn)
Adj. EBITDA ($Bn)
Implied adj. EBITDA margin on base business
32.0%
7.7% 8.7% 10.1%
+100bps +140bps
Base Business CAGR
Double digit Adj. EBITDA net of lumber price effect
Base business Commodity <>$400mbf
($0.1)
$0.7
5 | © 2021 Builders FirstSource. All Rights Reserved
Alliance Acquisition Aligned with Growth Strategy
150-mile primary
distribution radius
Tucson MSA
Prescott MSA
Phoenix MSA
Strategic Rationale
Alliance Acquisition Overview
✓ Strong economy and population trend fuels a long runway for housing
growth in the market
✓ Strategically-located facilities enabling delivery throughout Arizona
✓ Personalized go-to-market approach to enhance the customer
experience and enable cross selling across business units
✓ BFS value-added offerings expected to drive revenue synergies
Geographic Footprint, Value-Added Offerings, and Market Leadership Create a
Highly Strategic Fit for Builders FirstSource’s Integrated Network
#1 in Arizona with
over 45% market
share with the top
home builders
• Largest supplier of building materials in Arizona; a market that BFS did
not have a significant presence
• Experienced leadership team with ~500 dedicated employees across 9
operating locations
#3 ranked single-
family MSA;
Fastest growing
county in U.S.(1)
Unparalleled
delivery
radius and
dependability
1Norada Real Estate Investments - Maricopa County Housing Market Report Q3-2020
Transaction Announcement: May 2021 | Purchase Price: ~$400 Million
6 | © 2021 Builders FirstSource. All Rights Reserved
Construction is Among Least Digitized Sectors
Well-Positioned to Lead a Digital Transformation in Homebuilding
Industry Digitization Index
7 | © 2021 Builders FirstSource. All Rights Reserved1 McKinsey estimates2 Information & Communication Technology
8 | © 2021 Builders FirstSource. All Rights Reserved.
Paradigm Acquisition1 Bolsters Digital CapabilitiesTransaction Announcement: June 2021 | Purchase Price: ~$450 Million | Est. 2021 Revenue: $50 Million
Strategic Rationale & Commentary
• Paradigm has proven capabilities and technology in digitizing Homebuilding
• BLDR can invest in Paradigm’s technology to improve internal operational efficiency
• Combining the skills and capabilities of both teams will lead to increased market
share, and a more efficient Homebuilding industry
Our Operations &
Internal Processes
Interactions With
Vendors and Our Customers
Our Customers’
Business
Millwork ConfigurationAutomated Take-Off 2D Plan Take-Off To 3D Revit Models
Key Pillars in
Digital Strategy
Key Paradigm
Capabilities
The Company will pursue three key priorities with
Paradigm:
1) Drive BFS productivity with Paradigm technology
2) Utilize BFS platform to grow Paradigm adoption
3) Expand use of Paradigm technology on behalf of BFS customers
1 The closing of the Paradigm acquisition remains subject to the satisfaction or waiver of certain customary conditions to closing.
$23M
$50M
2018 2019 2020 2021E
Paradigm Business Overview
Digital Capabilities Drive More Efficient Construction
Digital Capabilities
• Software development and consulting services that help industry participants
boost sales and become more efficient
• A simplified process for configuring, estimating, and manufacturing complex
products with many options
• BFS ownership provides:
• Incremental investment to speed development
• Customer access that will accelerate adoption
• Deep credibility with builders
Software Revenue Mix & Positioning
Improved Homebuilding Process Utilizing Digital Tools
• Whole house configuration and take-offs provide real-time user feedback
• Creates opportunities for improved adoption and capture rates of value-add
Omni Nexus Estimate Omni Builder Vendo
• 2020 product launches:
• Diversify revenue
• Quickly gaining momentum
• Target different segments with greater market size
9 | © 2021 Builders FirstSource. All Rights Reserved
A Growing Digital Platform
Our Digital Platform will Fuel Long-Term Growth
Digital investment will deliver sustainable long-term Growth
Monetizing The Opportunity
• $1B of revenue growth in the next 5 years
• Increased Software Licensing revenue from enhanced sales channel
• Improved internal and market efficiencies
• Increased wallet share with existing customers
• Quoting and Specification of value-add products
• Ability to attract new customers
Strategic Direction
• Homebuilding and the sourcing of material is going digital
• $120B of annual material spend
• Provide digital solutions that solve builder pain points
• BLDR will be a key player in emerging digitally supported homebuilder space
Our Operations & Internal
Processes
Interaction With Our Vendors
and CustomersOur Customer’s Business
• Pre-construction time and cost savings
• Better control over the build process
• Reduced material and labor waste
• Improved stakeholder collaboration
• Accurate whole house take-offs
• New Home Builder tools for
homebuyer engagement
• Estimating and design efficiency
• Automated order flow
• Less visits to each job site
10 | © 2021 Builders FirstSource. All Rights Reserved
Stepping
Stone to
~$1 Billion
Opportunity
11 | © 2021 Builders FirstSource. All Rights Reserved
500+ US Building Products Businesses Totaling ~$80B in Sales Mapped
• Broaden product portfolio in target
markets
• Deepen presence in existing service
areas by expanding product portfolios
Geographic
Scale
• Provide innovative solutions to build
more efficiently and address labor
constraintsTechnological
Advancement
1Based on $81K assumed materials cost per home as of 2019 according to BAML cost of a home data, adjusted for 2020 lumber prices and 973K single-family, 320K multi-family housing starts in 2020 according to the U.S. Census Bureau Source: U.S. census and Company estimates
Pursue Accretive Tuck-in M&A
• Enhance opportunities to partner with
customers
• Increase higher margin value-added
products mix
Value Add
Products
Target acquisition criteria
2021 2022
Synergy Target One Year Ahead of Schedule
Estimated Run-Rate Cost Savings of ~$150m(1)
($ in millions)
Now expect to
realize savings of
~$90m in 2021
growing to
~$150m in 2022
$80m to $100m
$140m to $160m
1Excludes $125m - $145m costs to achieve.12 | © 2021 Builders FirstSource. All Rights Reserved.
Major Milestones
Focus On Customers And Employees
Focus On Cost Synergies
• Leadership changes finalized and turnover remains well
managed and stable
• First Wave of ERP conversions successfully completed
• ~$36 million of cost savings through Q2
• Realized run-rate savings of $80m to $100m for full year
2021
• Now expect realized cost savings of ~$150m(1) through
2022, compared to initial expectations of $130-$150m
through 2023
47%
15%
20%
3%
7%
8%
Q2 2021 - Broad Strength Across Product Portfolio
$305
$415
Q2 20 Q2 21
$851
$2,604
Q2 20 Q2 21
$557
$1,091
Q2 20 Q2 21
$691
$838
Q2 20 Q2 21
Manufactured
Products
Window, Doors &
Millwork
+206%+96% +21% +36%
Va
lue-A
dd
ed
P
rod
uc
t M
ix ~
35
%
Net sales mix by product category(% of total net sales)
Siding, Metal &
Concrete
$158
$192
Q2 20 Q2 21
+21%
Gypsum, Roofing &
Insulation
($M/ % change)
Net sales by product category (Q2 2021 compared to combined pro forma Q2 2020)
Specialized Products:Value-Added Products:Lumber & Lumber
Sheet Goods:
Value-added core organic1 sales grew 35.4%
• 57.9% growth in Manufactured Products – Robust single family demand drove significant growth despite material availability constraints
• Solid windows, doors and millwork growth despite ongoing material availability challenges
• Off-site assembly and other innovative solutions continue to help customer’s address labor challenges and jobsite productivity, fueling profitable growth
Lumber & Lumber
Sheet Goods
Other
Gypsum, Roofing
& Insulation
Siding, Metal
& Concrete
Manufactured
Products
Windows,
Doors &
Millwork
1Core Organic compares Q2 2021 to combined non-GAAP pro forma Q2 2020, and excludes other acquisitions, commodity price fluctuations and differences in selling days between periods.
13 | © 2021 Builders FirstSource. All Rights Reserved.
836
252
77%
6%
17%
2,926
5,577
Q2 2020 Non-Commodity Commodity Q2 2021
Q2 2021 Core Organic Sales Growth Across All End Markets
coupled with High EBITDA Conversion rate of Sales
Net sales bridge2 (Q2 2021 compared to combined pro forma Q2 2020)($M)
Sales mix: Q2 2021.
Core organic1 sales highlights:
• Single family: +44.1% on broad market recovery
• R&R / Other: +16.3% with strength in most parts of the country
• Multi family: +6.0% on the timing of projects started in prior periods`
1Core Organic compares Q2 2021 to combined non-GAAP pro forma Q2 2020 as though the merger with BMC was completed on January 1 2020, and excludes other acquisitions, commodity price fluctuations and differences in selling days between periods.2Adjusted EBITDA non commodity versus commodity mix based on management estimates.
14 | © 2021 Builders FirstSource. All Rights Reserved.
Net sales mix by end market
Multi-Family
Repair &
Remodel / Other
Single-Family
Adjusted EBITDA bridge2
Commodity
Non
Commodity
EBITDA highlights:
• Non commodity Adjusted EBITDA growth of ~75%
• Approximately 17% EBITDA Conversion, excluding commodity, demonstrates effective execution across the P&L
• Conversion rate of Commodity inflation demonstrates effective pricing in volatile environment
Q2 2020
Q2 2021
+35.3% Core Organic
+3.5% Acquisitions
1,516
1,135
~191
~393
($M)
1. Maintain a strong balance sheet; July $1 billion debt offering at 4 ¼%
2. Reinvest in our business to drive growth and productivity
3. Continue tuck-in M&A strategy
4. Return capital to shareholders
- - - - - -
695
- -
550
-
1,000
'21 '22 '23 '24 '25 '26 '27 '28 '29 '30 '31 '32
Strong Balance Sheet and Liquidity Provide Financial
Flexibility
Weighted Average Debt Maturity of ~10 Years3
Balanced Capital Allocation Priorities
4.2X
3.1X2.5X
1.3X 1.0X
2017 2018 2019 2020 LTM Q22021
Pro Forma Net Leverage1 Improvement
$119.1 $186.2
$397.7$286.3
~$1,500
18.7% 17.7% 18.0%2017 2018 2019 2020 2021E
1Pro forma as of 12/31/2020, including net proceeds from April 2020 offering of $350 million aggregate principal amount of senior notes due 2027. Net Leverage calculated as principal value of debt and lease obligations less cash and cash equivalents divided by LTM Adj EBITDA. 2 Net of PPE.3Excludes finance leases and other finance obligations.
Strong Pro Forma Free Cash Flow2
Senior Notes
Debt upgraded by
Moody’s and S&P
Increased ABL to $1.4B and
extended maturity to January 2026
15 | © 2021 Builders FirstSource. All Rights Reserved.
Raised 2021 Outlook
1. 2021 Sales include the following acquisitions: Bianchi & Company, Kansas Building Supply Company & TW Perry.
2. Adjusted EBITDA is a Non-GAAP financial measure. See the Non-GAAP (Adjusted) Financial Measures slide in this presentation for a definition thereof and a discussion of certain matters regarding non-GAAP guidance.
3. The 2021 capital expenditure expectation is net of proceeds from the sale of property, equipment and real estate.
4. Depreciation expense forecast includes depreciation accounted for within cost of sales.
5. Assumes a $400/mbf commodity price for all periods and maintained for the full year16 | © 2021 Builders FirstSource. All Rights Reserved.
2021 Full Year Assumptions
Metrics Current Guidance Prior Guidance
Sales1 (YoY Growth)
Adjusted EBITDA2 (YoY Growth)
Base Business Sales5
Base Business Adjusted EBITDA5
Free Cash Flow
Capital Expenditures3
Interest expense
Effective tax rate
Depreciation & amortization expense 4
2021 Full Year Financial Expectations
Metrics Current Guidance Prior Guidance 2020 Pro Forma Baseline
$12.8 billion
$1.1 billion
$12.5 billion
$1.1 billion
$286 million
$181 million
$158 million
23.4%
$198 million
Single family starts growth (BLDR geographies)
Multi-family starts growth (BLDR geographies)
R&R starts growth (BLDR geographies)
Commodity pricing impact (BLDR demand mix)
Realized cost synergy savings (BMC integration)
Up mid to high teens
Up high-single digits
Up low- to mid-single digits
Up +18% to 28%
$80 to $100 million
Up low-double digits
Down high-single to low-double digits
Up low- to mid-single digits
Up +10% to 20%
$60 to $70 million
$16.0 to $17.0 billion (+25% to +33%)
$1.75 to $1.85 billion (+64% to +73%)
N/A
N/A
$1.3 to $1.5 billion
1.4% to 1.6% of net sales
$110 to $115 million
23.0% to 25.0%
$540 to $550 million
$18.0 to $19.0 billion (+41% to +48%)
$2.2 to $2.4 billion (+105% to +124%)
$15.3 billion
$1.6 billion
$1.4 to $1.6 billion
$200 million to $220 million
$130 to $140 million
23.0% to 25.0%
$525 to $535 million
Differentiated Market Leader Positioned for Above
Market Growth and Expanding Profitability
Experienced management team
Leadership in a highly fragmented industry
Exceptional geographic, customer, and end market diversity
Expanding cash flow generation and maintaining leverage
Strategic investment in value-added capacity, driving share gains and margin expansion
Focus on maintaining strong balance sheet and liquidity
Operational excellence and cost management initiatives driving gains in efficiency, productivity, and customer value
17 | © 2021 Builders FirstSource. All Rights Reserved.
www.bldr.com
Michael NeeseSVP, Investor RelationsMichael.Neese@bldr.com
214-765-380419 | © 2021 Builders FirstSource. All Rights Reserved.
Base Business 1 Sales and Adj. EBITDA projection
by commodity price
Assumptions:
• Provided a grid with various commodity cost assumptions and the corresponding profits if you assume static commodity prices. Please keep in mind that shorter term price fluctuations can result in materially different results than in a static commodity environment.
• Margin rates for each product category is maintained at each commodity price tier/sensitivity
• Total margin changes with commodity tier driven by sales mix changes
• Expenses associated with commodity price changes are included
• Includes Acquisitions and 2021 expectation of realized market participation
• Price at each tier is static for the full year
• Price tiers reflect BFS species/region composite
• Low/High ranges for sales set at -/+ 5%
Illustrative FY 2021E
AEBITDA ($Bn)Sales ($Bn)
$/m
bf
$400
$500
$600
$800
$14.5-16.1
$16.1-17.7
$17.5-19.3
$18.9-20.9
$20.3-22.5
$1.5-1.6
$1.7-1.9
$2.0-2.2
$2.2-2.4$700
$2.5-2.7
20 | © 2021 Builders FirstSource. All Rights Reserved1. This estimate assumes $400/mbf lumber & sheet good pricing
Reconciliations
23 | 2021 Builders FirstSource. All Rights Reserved.
BUILDERS FIRSTSOURCE, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
Six Months Ended
June 30,
2021 2020
(Unaudited)
(In thousands)
Cash flows from operating activities:
Net income $ 669,815 $ 87,691
Adjustments to reconcile net income to net cash (used in) provided by operating
activities:
Depreciation and amortization 261,553 57,875
Deferred income taxes (32,753 ) 2,248
Stock-based compensation expense 18,867 6,720
Other non-cash adjustments 3,534 6,748
Changes in assets and liabilities, net of assets acquired and liabilities assumed:
Receivables (867,143 ) (69,991 )
Inventories (840,283 ) (53,685 )
Other current assets (53,672 ) 2,987
Other assets and liabilities 10,201 39,452
Accounts payable 448,527 108,152
Accrued liabilities 177,578 (18,311 )
Net cash (used in) provided by operating activities (203,776 ) 169,886
Cash flows from investing activities:
Purchases of property, plant and equipment (98,293 ) (54,809 )
Proceeds from sale of property, plant and equipment 9,321 1,451
Cash acquired in BMC Merger 167,490 —
Prepayments for acquisitions (225,000 ) —
Cash used for acquisitions (24,833 ) (15,893 )
Net cash used in investing activities (171,315 ) (69,251 )
Cash flows from financing activities:
Borrowings under revolving credit facility 1,769,000 791,000
Repayments under revolving credit facility (1,233,000 ) (818,000 )
Proceeds from long-term debt and other loans — 895,625
Repayments of long-term debt and other loans (470,330 ) (557,964 )
Payments of debt extinguishment costs (2,475 ) (22,686 )
Payments of loan costs (4,272 ) (13,800 )
Exercise of stock options 335 708
Repurchase of common stock (17,707 ) (4,153 )
Net cash provided by financing activities 41,551 270,730
Net change in cash and cash equivalents (333,540 ) 371,365
Cash and cash equivalents at beginning of period 423,806 14,096
Cash and cash equivalents at end of period $ 90,266 $ 385,461
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